India is a leader in Information Technology and, being an English speaking country, also has the ability to be globally competitive in Professional Services. Latin American and Southeast Asian economies, such as Brazil or Indonesia, will become increasingly competitive in agriculture and energy. The WTO and various other bilateral free trade agreements are reducing the barriers to these types of goods, making them increasingly attractive to the European consumer.
Considering the competition for European markets, the EU's greatest value and likely greatest priority will be the protection of European markets, not the opening of global markets. The UK, because of its focus on global finance and professional services, has little to gain from the protection of its own market and much more to gain from the opening of non-European markets.
Euro Zone
The current Eurozone crisis demonstrates the untenability of the EU notion of economic and monetary union. The Eurozone's 17 member countries do not have similar monetary policies, making harmonious monetary union very problematic. Germany, for instance, has very strict monetary policies, which is enabled by stable economic growth and low unemployment. In contrast, weaker Eurozone countries such as Greece, Italy, and Spain have stagnated economically for the better part of a decade, producing high unemployment and failing firms. To alleviate these problems, their governments spend on social welfare and economic subsidies.
Germany's departure from the Eurozone would not only benefit Germany, but could benefit the remaining Eurozone members.
The weaker Eurozone countries, such as Spain and Italy, would have the flexibility in monetary policy to correct unique economic issues. Spain and Italy, for instance, both suffer from high labor costs which have hampered their economic growth in the past decade. The lack of economic growth and consequently tax revenue is a major cause of their present fiscal deficits. Without the dominant Germany there to impose strict monetary policies, Eurozone countries could devalue their currencies to promote production and reduce consumption, as China has.
Germany would benefit in the short-term from leaving the Eurozone but would suffer economically in the long-term. In the short-term, Germany's currency would actually be stronger by 2.4% if the Eurozone were to collapse. However, in a more broad and long-term economic context, Germany benefits greatly from the Eurozone because of its role as the EU's biggest exporter. The Eurozone had a positive effect on exports in "scale-intensive" industries such as the chemical, office machinery, and accounting industries in highly industrialized Germany.
Much of the debt that weaker EU countries have accumulated was spent on German goods.
In light of the great economic diversity of the EU, the vision of a centralized economic and monetary union will continue to prove unrealistic. Furthermore, disharmony within the economic union will make it even more difficult to respond to the inevitable threats from emerging global competitors. The EU's current and future competitors, e.g. The U.S., China, India, and Brazil are not unwieldy supra-national governments but national governments and will face the internal struggles which burden the EU.
The EU model of supranational government is not wholly unrealistic. There are many political entities which have similar ultimate goals, such as ASEAN, MERCOSUR, or NAFTA. However, the EU is much more developed as a supranational political entity than either NAFTA or MERCOSUR because it has a standing governmental body and a common currency.
Other multi-national political and economic associations are much more focused and conservative in their approach. NAFTA is the least developed as a political entity and is purely a trade agreement at this point, more of a legal institution than a political organization.
MERCOSUR is a little more developed than NAFTA, but exercises little supranational political authority over its member countries.
NAFTA and MERCOSUR have been successful and stable in promoting trade precisely because they have not required extensive commitments on the part of its members.
ASEAN is perhaps the most similar to the EU at this point in the authority it has over its member countries. ASEAN has been successful in promoting trade through cooperation in the ASEAN regional free trade...
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